DEALBOOK; Carlos Slim's América Móvil Expands In Austria

By KEVIN J. O'BRIEN

Published: June 16, 2012

BERLIN -- America Movil, the Latin American phone carrier owned by billionaire Carlos Slim Helu, said on Friday that it had reached an agreement to increase its stake in Telekom Austria, the country's leading operator, to 23 percent, advancing the Mexican investor's push into the European telecommunications market.

America Movil has agreed to acquire a 21 percent stake in the operator, based in Vienna, that is held by Ronny Pecik, an Austrian investor, for an undisclosed sum. The sale is expected to conclude by the end of this year, the company said.

''This acquisition positions AMX as a long-term strategic partner of Telekom Austria,'' America Movil said in a statement. ''It is part of AMX's geographic diversification strategy and provides an attractive presence in central and eastern Europe.''

The Austrian purchase is the second foray by Mr. Slim, who owns a stake of about 8 percent in The New York Times Company, into Europe.

America Movil is currently pursuing a $3.2 billion hostile bid to raise ts stake in KPN, the Dutch market leader, to 28 percent. On Wednesday, the Mexico City-based operator said it had amassed an 8.12 percent stake in KPN so far. The management of KPN has rejected America Movil's bid, which runs through June 27, as too low.

Claire Verhagen, a spokeswoman for America Movil in Amsterdam, said the company did not have an immediate comment on whether it would pursue a majority stake in the Austrian operator, or an update on the status of its bid for a larger stake in KPN.

Philip Kendall, an analyst with Strategy Analytics in Milton Keynes, England, said Mr. Slim could be seeking to build the foundation of a pan-European operator that could eventually shake up a European market dominated by Telefonica, Deutsche Telekom, France Telecom and Vodafone. Mr. Slim, who has amassed his fortune by well-timed investments in distressed companies, will find plenty of opportunity in Europe's depressed telecom sector, Mr. Kendall said.

''But I must say that I struggle to see the attractiveness of Europe for Carlos Slim,'' Mr. Kendall said. ''It is a market that is in decline in many respects. Revenues are falling and margins are under pressure. Telekom Austria is a little more exposed to eastern Europe, where there is some growth left, but not much.''

Under terms of the Austrian agreement, America Movil said it had obtained a 5 percent stake in Telekom Austria and would purchase a further 16 percent later this year, pending government approval. Based on Thursday's closing price of Telekom Austria's shares, the purchase by America Movil was worth about 765 million euros, $963.9 million.
Shares in Telekom Austria rose 2.4 percent Friday in Vienna trading.

The Austrian state government holding company, OeIAG, which holds a 28.4 percent stake in Telekom Austria and is its biggest shareholder, has voiced no objections to the sale to America Movil. Under Austrian law, shares of 25 percent or more in the former monopoly phone company need approval from the Austrian Economics Ministry.
Telekom Austria had 20.3 million wireless customers and 2.6 million fixed-line customers at the end of March, according to its quarterly report. The company has subsidiaries in Belarus, Bulgaria, Croatia, Lichtenstein, Serbia, Slovenia and Macedonia.

America Movil is Latin America's largest operator, with 246 million wireless subscribers and 60 million fixed line subscribers at the end of March. The company's arch-rival is Telefonica of Spain, which had 170.8 million wireless and 34.6 million fixed subscribers in Latin America at the end of March.

While executives for America Movil have repeatedly described the company's interest in Europe as part of a larger diversification strategy, Mr. Kendall said that Mr. Slim may be attempting to exert pressure on Telefonica on its home Continent to force the Spanish operator to retrench in Latin America.

''There is a lot of talk that this is a pure power play by America Movil directed at Telefonica,'' Mr. Kendall said. ''But it is not clear what is behind this.''

This is a more complete version of the story than the one that appeared in print.